On October 6, 2024, it was reported that foreign portfolio investments in Kenya surged to Sh6.4 billion ($49.5 million) as of June 2024, marking a 121% increase from a negative Sh32.6 billion ($233.4 million) in June 2023. This rebound in investor sentiment follows a period of negative portfolio investment liabilities since June 2022, largely attributed to US Federal Reserve rate hikes. Economist Churchill Ogutu highlighted a renewed confidence among local foreign investors, with increased investments in equities and securities [f52cc208].
This positive trend in foreign investments aligns with the recent rise in Kenya's foreign exchange reserves, which reached $8,027 million (KSh 1.03 trillion) on September 26, 2024, up from $7,856 million (KSh 1.01 trillion) a week earlier. The Central Bank of Kenya (CBK) confirmed that these reserves are sufficient to cover 4.1 months of imports, providing a buffer against external shocks [7f1e11c1].
Market analyst Rufas Kamau noted that the shilling's stability, trading at 129.19 per US dollar, is supported by increased foreign funding following President William Ruto's recent state visit to the United States, which resulted in multibillion-dollar funding agreements [7f1e11c1].
In contrast, the Uganda shilling has faced challenges, experiencing its first depreciation against the U.S. dollar in four months, with an average mid-rate reported at 3,723.6 per dollar on September 19, 2024. This decline was attributed to heightened demand for dollars from corporates and traders, despite significant inflows from coffee exports and NGOs [1796e044].
The Nairobi Securities Exchange's market capitalization rose by over Sh237 billion to Sh1.676 trillion by September 2024, reflecting the positive sentiment among foreign investors, as indicated by a 45% return rate on the MSCI Index since January 2024 [f52cc208]. As both countries navigate their respective economic landscapes, market participants are closely monitoring the factors influencing currency stability and foreign exchange reserves in East Africa [1796e044].